CP heralds new proof of concept interline service in partnership with KCS

While Canadian Pacific Railway’s (CP) acquisition of Kansas City Southern (KCS) is not expected to be made official until the second half of this year, CP said this week that the companies are collaborating on an interline basis, having rolled out what it said is the first dedicated intermodal train.

This train runs between Lázaro Cárdenas and the U.S. Midwest. CP officials said that the impetus for this train was driven by the need to avoid excessive delays “due to the unprecedented and ongoing supply chain challenges affecting North America's West Coast.”

And CP explained that the first train as part of this collaboration moving containers that were offloaded at Lázaro Cárdenas reached its destination at CP’’s Chicago area Bensenville yard yesterday morning. What’s more, it said that the total transit time was seven days, with CP and KCS working in tandem as interline carriers “to offer a new intermodal service to meet market demand.”

CP said that should the STB sign off on CP’s acquisition of KCS, it would make the necessary investments to offer regular Lázaro Cárdenas to Chicago service on a single-line basis, as well as support the tremendous growth potential that would flow from new competitive and reliable rail transportation options for inland shippers.

“With minimal on dock dwell, a smooth and seamless border crossing, and an expedited rail service, there is the potential to create an end-to-end transit experience that will be second-to-none on the West Coast if the merger is approved,” said CP. “A CP-KCS combination will enable a host of new train services providing enhanced competitive alternative to existing rail service providers. The single integrated rail system would connect premier ports on the U.S. Gulf, Atlantic and Pacific coasts with key overseas markets.”

CP President and CEO Keith Creel said in a statement that this Mexico-to-Midwest train is a proof of concept and a sign of things to come if a combined Canadian Pacific Kansas City (CPKC) network is approved by the Surface Transportation Board.

“With STB approval, CPKC will work with our customers and invest in new infrastructure and train services to unlock the full potential of the combined network to offer unmatched supply chain alternatives and benefits compared to other rail options through congested ports and a real alternative to highway-clogging trucks,” said Creel. “I would envision creating a new Mexico Midwest Express interline service that could deliver all of these benefits.” 

At the December RailTrends conference in New York, which was hosted by Progressive Railroading magazine and independent railroad analyst Anthony Hatch, Creel said that the CP-KCS deal represents what he called a transformational transaction.

“This is a transaction we pursued with vigor and aggressiveness, and we were fighting for what we believed in,” said Creel. “We prevailed, to this point, with grit, determination, and resolve. We are super-excited about this opportunity. It is the one and only transcontinental railroad [through Canada, the United States, and Mexico] and won’t be replicated. In and of itself, it is a unique combination, which is what motivated a lot of this. It is a combination that allows growth and for the pursuit of the next 140 years. We have a franchise that is a leader, and we are in a very good position.”

As for the future CPKC network, Creel explained it is positioned to provide a unique set of outcomes that will be unparalleled in this industry.

“When you think about the need for this, there has never been a greater need,” he said. “I am thinking about the environment we will be serving in a better way, that communities—that because of this transaction—it enables and unlocks investment for infrastructure and installs PTC (Positive Train Control)…and all of the details of running a business and running it efficiently and safely. It will also take trucks off of the road. We have said for a long time that we [trains] are 75% more fuel-efficient. The number of trucks that come across the Mexican border from Laredo into the Midwest, to Kansas City and Chicago and into Canada…to be able to take that environmental opportunity and match it with an economic opportunity will be…is among the reasons we are excited for this opportunity.”